In Uncategorized on 04/19/2011 at 17:05

So says Judge Dawson in James Bruce Thornberry and Laura Anne Thornberry, 136 T.C. 16, released 4/19/11, to both the taxpayers and IRS. IRS sent James and Laura notices of lien and notices of intent to levy. James and Laura timely responded with a request for due process hearings, attaching to their requests a form they downloaded from a tax protesters’ website. A settlement officer in Appeals replied with a SO 4380 letter, treating James’ and Laura’s request as no request, pursuant to the Section 6702 frivolity kick-out. Frivolous requests for hearings, installment agreements and hardship relief are treated as no requests at all, and are not reviewable by Tax Court; no hearing, no response necessary. See also Section 6330(g).

James and Laura petitioned Tax Court. IRS says “no jurisdiction. Once IRS determines the request is frivolous, Tax Court is ousted of jurisdiction.”

Not so, says Judge Dawson. After a lengthy review of the procedures for requests for hearings following notice of lien and notice of intent to levy (which I recommend to practitioners as a good review of the procedural aspects), Tax Court dealt with IRS’ argument that the SO 4380 letters were not “determinations.” The heading of a paper does not determine its function, says Judge Dawson. The SO 4380 letters say “we’re ignoring your non-request.” That is a determination.

Tax Court said: “Essentially, respondent’s position is that because the Appeals Office treated petitioners’ request in toto as if it were never submitted, the determination to proceed with collection was not in response to a request for an administrative hearing. Respondent asserts that the Appeals Office’s determination regarding petitioners’ request is not subject to any judicial review by this Court pursuant to section 6330(g)” 136 T.C. 16, at p.15.

Reviewing the legislative history behind the adoption of Section 6330(g), Tax Court finds it was intended to clean out frivolous requests and petitions used by tax protesters to stall collection of revenue. But Section 6703 requires a hearing before any Section 6702 penalty (the $5,000 frivolity penalty) may be imposed.

The legislative history shows Congress required IRS to state periodically what positions IRS deems frivolous. Tax Court extends this to require IRS to state in the instant case what argument is advanced by James and Laura to delay collection of revenue, or is frivolous.

Judge Dawson said: “Section 6703(a) clearly contemplates judicial review of a determination by the Appeals Office that a specified submission, including a request for an administrative hearing under sections 6320 and 6330, is a specified frivolous submission. Consequently, while section 6330(g) prohibits judicial review of the portion of a request for an administrative hearing that the Appeals Office determined is based on an identified frivolous position or reflects a desire to delay, it does not prohibit judicial review of that determination by the Appeals Office.” (emphasis by the Court) 136 T.C. 16, at p. 19.

Judge Dawson had already observed: “The determination letters did not specify which statements or individual grounds listed in petitioners’ requests or the attachments thereto were frivolous issues or otherwise identify anything in the request, the attachment, or petitioners’ administrative file or conduct that reflected a desire to delay or impede Federal tax administration.” 136 T.C. at p. 5.

Patience exhausted, Judge Dawson admonishes both sides:  “The delay in resolving this case has been caused by both parties’ using boilerplate ‘one size fits all’ forms. Thus, in these circumstances, this Court has jurisdiction, and respondent’s motion to dismiss for lack of jurisdiction will be denied. … we conclude that the settlement officer could not treat petitioners’ entire request as if it were never submitted. Section 6330(g) requires the Appeals Office to determine the specific portions of petitioners’ request for a hearing that are regarded as frivolous or reflect a desire to delay or impede the administration of Federal tax laws, leaving only for hearing the legitimate and bona fide issues petitioners raised. The Appeals Office has not yet done this. Petitioners, on the other hand, have set forth in their administrative hearing request a litany of recitations lifted from an Internet Web site, many of which tend to show an attempt to delay or impede the administration of Federal tax laws. We have in this Opinion notified petitioners that merely attaching a list downloaded from the Internet that includes grounds that clearly do not apply to their case without identifying specific issues and grounds relevant to their hearing request does not satisfy the requirements of sections 6320(b)(1) and 6330(b)(1). Accordingly, the Court will require petitioners to identify the specific issues and the grounds they wish to raise before taking further action in this case.” 136 T.C. 16, at pp. 27-28.

In short, you’ve both got to be more specific.


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